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Opening-up the objective function: choice behavior and economic and non-economic variables—core and marginal altruism

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  • Morris Altman

    () (Department of Economics, University of Saskatchewan)

Abstract

A revised model of the preference function is presented incorporating utility maximizing acts of material self-sacrifice. This model incorporates neoclassical and behavioral arguments, allowing for the stylized fact that economic agents are motivated by both material and non-material incentives. Given such a preference function, choice behavior is modeled as a function of relative opportunity costs (price) and real income. Preferences are determined by a variety of variables inclusive of social capital and education. There is therefore a core preference based upon non-economic variables and a ‘marginal' component which is a function of conventional economic variables. The relative importance of these two components in determinating choice behavior is an empirical question. Building upon conventional tools, a demand curve for moral acts is derived and underlying income and substitution effects discussed. Empirical evidence from the tipping literature is used to illustrate the model.

Suggested Citation

  • Morris Altman, 2006. "Opening-up the objective function: choice behavior and economic and non-economic variables—core and marginal altruism," Economics Bulletin, AccessEcon, vol. 4(33), pages 1-7.
  • Handle: RePEc:ebl:ecbull:eb-06d00022
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    References listed on IDEAS

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    1. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
    2. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
    3. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    4. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    5. Ofer H. Azar, 2003. "The implications of tipping for economics and management," Others 0309002, EconWPA.
    6. Morris Altman, 1999. "The Methodology of Economics and the Survival Principle Revisited and Revised: Some Welfare and Public Policy Implications of Modeling the Economic Agent," Review of Social Economy, Taylor & Francis Journals, vol. 57(4), pages 427-449.
    7. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
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    Citations

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    Cited by:

    1. Paolilli, Antonio Luigi, 2009. "About the "economic" origin of altruism," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(1), pages 60-71, January.
    2. Czap, Natalia V. & Czap, Hans J. & Khachaturyan, Marianna & Lynne, Gary D. & Burbach, Mark, 2012. "Walking in the shoes of others: Experimental testing of dual-interest and empathy in environmental choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 642-653.
    3. Ovchinnikova, Natalia V. & Czap, Hans J. & Lynne, Gary D. & Larimer, Christopher W., 2009. ""I don't want to be selling my soul": Two experiments in environmental economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 221-229, March.
    4. Altman, Morris, 2011. "Is There a Cooperative Advantage?," Working Paper Series 4078, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    5. Mann, Stefan, 2008. "Analysing fair trade in economic terms," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 2034-2042, October.
    6. Mealem, Yosef & Siniver, Erez & Yaniv, Gideon, 2012. "Patient compliance, physician empathy and financial incentives within a principal-agent framework," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(6), pages 827-830.

    More about this item

    JEL classification:

    • D0 - Microeconomics - - General
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

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